Year 1 econ question
M Assuming you are a junior business consultant of "759 Store". Your boss asks you to prepare a simple demand and supply analysis about the business of snack shops run by 759 Store in Hong Kong and identify any possible changes in the market of snacks business faced by 759 Store. After investigation, you identify 2 pieces of relevant information which may affect the snack business of 759 Store: News 1: News 2: More and more snack shops are 759 Store receives more and more opened by other companies in bulk purchase discount from Hong Kong such as \"Best Mart\" overseas wholesalers as the and \"Magstore\". operation scale is getting larger. (a) Use the demand and supply analysis to study the snacks business of 759 Store. Explain how the equilibrium price and equilibrium quantity of snacks sold by 759 Store are affected when \"News 1\" is considered only. No diagram is needed but you need to describe how the curve(s) shifts. (3 marks) (b) Use the demand and supply analysis to study the snacks business of 759 Store. Explain how the equilibrium price and equilibrium quantity of snacks sold by 759 Store are affected when \"News 2\" is considered only. No diagram is needed but you need to describe how the curve(s) shifts. [3 marks) (c) To consider both the effects in parts (a) and (b), what are the possible effects on the equilibrium price and equilibrium quantity of snacks sold by 759 Store? Illustrate your explanations of different possibilities with demand and supply diagrams in your analysis. (14 marks) \\ gm As more and more snack shops are opened in Hong Kong, the number of increases 1 decreases and leads to increases [ decreases in demand for snacks sold by 759 Store. Graphically, the demand curve of snacks sold by 759 Store shifts rightward [ leftward from Do to 01 In the diagram, Both its equilibrium price and eguilibrium guantig will increase[ decrease. lb) Market Supp 1 At the same time, 759 Store receives more bulk purchase m y I i I . 7' discount from wholesalers, there Is an increase [ a decrease in the t It will lead to an increase 1 a decrease in supply of snacks sold by 759 Store. Graphically, the supply curve for snacks sold by 759 Store m rightward ( leftward from so to 51m the diagram. Its equilibrium price will but the egulllbrium quantity wlII To consider both factors together, the equilibrium price of snacks sold by 759 Store will but the impact on the equilibrium quantity is If the decrease in demand is less than the increase In supply in the market of snack food sold by 759 Store, the equilibrium price decreases but the equilibrium quantity Snack load madet laced II! 759 Store If the decrease in demand is m the increase in supply in the market of snack food sold by 759 Store, both the equilibrium price and equili quantity Draw the demand and supply diagram below} Question 2 Draw a demand and supply diagram for the market for fine dining to illustrate the observation of decreasing price of fine dining in the market is possible based on the below two pieces of information. Source A Source B A recent government report has shown the average Some fine dining restaurants closed down due to the monthly salary dropped from HK$18,000 to HK$15,000. COVID-19 pandemic. Suggested solution: 7 X
